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PARIS, Jan 8 (Reuters) - French prosecutors are to open a
preliminary investigation into Budget Minister Jerome Cahuzac
over allegations that he had a secret bank account in
Switzerland, the Paris prosecutor's office said on Tuesday.

Cahuzac, who is leading a government crackdown on tax
evasion, has vigorously denied a report by the French
investigative news website Mediapart that he held an undisclosed
account at the Swiss bank UBS until the start of 2010.

He said he would welcome an inquiry that he was confident
would prove his innocence.

President Francois Hollande's office said Cahuzac had the
full support of the government and that the investigation would
enable justice to be done.

The investigation is nevertheless a huge embarrassment for
Hollande's eight-month-old Socialist government, which has made
raising income and capital gains taxes on the rich a central
plank of its economic policy.

A preliminary investigation could take several months and
would lead either to Cahuzac being placed under formal
investigation or to the case being dropped for lack of evidence.

"Jerome Cahuzac welcomes the Paris prosecutor's decision,"
his office said in a statement. "This step will, as he has
always said, show his complete innocence of the absurd
allegations that he has been subjected to."

Mediapart chief Edwy Plenel told I>Tele television that he
stood by the story.

Mediapart published its first report on the affair in early
December and followed up by posting a recording of a telephone
call, which it said dated from 2000, in which a male voice it
cited as Cahuzac's mentions an account he held at UBS.

Cahuzac has filed legal complaints against the website and
repeated his denial of the allegations on France 2 television
late on Monday. He said the voice in the recording was not his.

The prosecutor's office said that, given the sensitivity of
the allegations and the time it would take to process Cahuzac's
complaints, it had no option but to open an inquiry immediately.

"The Paris prosecutor has as a result decided to open a
preliminary investigation for tax fraud," it said.

Cahuzac is the first minister in Hollande's government to be
accused of misconduct, just as Hollande's approval ratings are
sliding into the mid-30s, due largely to a lack of faith that he
can bring down rampant unemployment and restore economic growth.

Hollande promised during his campaign a year ago that his
government would be beyond reproach.